Insurance Companies Duck Obamacare Repeal Fight

The once-powerful health insurance lobby — the same one that killed Hillarycare a generation ago and helped usher in Obamacare — can’t pick a side in the latest battle over America’s health care system.

Some major members of the sprawling trillion-dollar industry, like Humana and Cigna, have little at stake in the fight. Other insurers heavily invested in the Obamacare markets, like the regional Blue Cross Blue Shield plans, are urging Congress to fix the 2010 health law instead of shredding it. And then there’s Anthem, a rare industry voice supporting repeal.

The result is the lobby has lost influence and is now struggling to mount a unified front against Republican efforts to push through an Obamacare replacement. At the same time, the Trump administration has ignored their pleas to stabilize Obamacare’s exchanges in the short term, which could send the wobbly insurance marketplaces crashing before the GOP agrees on a health care plan.

“I’m still hoping they’ll step forward more aggressively and articulate how horrendous this plan is,” said Sen. Richard Blumenthal (D-Conn.), whose home state is the headquarters for several health insurance giants. “They know full well what the impact will be.”

Rep. Michael Burgess (R-Texas), who chairs the Energy and Commerce Committee’s health subcommittee, said officials from the main industry lobby, America’s Health Insurance Plans, never reached out to him while the House drafted an Obamacare replacement bill.

“I may have had one meeting in January [with] an insurer in my state,” Burgess said. “Otherwise I have not been contacted.”

AHIP officials and allies push back strongly against suggestions that the organization has been weakened. They argue that AHIP has picked its battles carefully, enabling the lobbying group to maintain communication with the Trump administration and lawmakers.

“There’s a time to be in the fray, and there’s a time to be above the fray and to provide nuanced counsel to the policy makers,” said Mark Ganz, CEO of Cambia Health Solutions and the immediate past board chair of AHIP. “I’ve been a voice that we need to be thoughtful and nuanced and not add to the noise.”

Insurers were at the center of the last two major health care brawls. They torpedoed the Clinton health plan of the early 1990s with a devastating $20 million ad campaign, including the now-legendary “Harry and Louise” commercials. Eight years ago, insurers begrudgingly went along with Obamacare when reform seemed inevitable.

But the health insurance lobby has fewer resources after losing some large companies as members. AHIP has also seen a wholesale turnover of senior leadership following the departure of its longtime CEO Karen Ignagni two years ago. That upheaval has been made tougher by the diverging interests among its remaining members.

“What insurers ought to recognize is that the bill is a disaster for them because it’s a disaster for their customers,” said Tom Epstein, who until recently headed public affairs at Blue Shield of California. “It’s a difficult predicament, but I think they need to take a stronger stand.”

AHIP’s decision in 2015 to hire former Obama health official Marilyn Tavenner as CEO was seen as a coup at the time, given her central role in implementing Obamacare and her solid relationships with Republican lawmakers.

“She’s got a very long and storied history of looking at the health care system from a lot of different angles,” AHIP spokeswoman Kristine Grow said.

However, the GOP’s full takeover of the federal government last November has made the decision to hire someone so closely identified with Obamacare look like less of a triumph.

“AHIP always has a seat at the table,” Grow said. “While people continue to be frustrated with the nuance of our messaging, we’re representing the interests of our members.”

Insurers generally have two major problems with the repeal bill that passed the House in May. They think its tax credits to help low-income Americans purchase coverage are too stingy, and they’re worried about its $834 billion cut to Medicaid — a program that’s been increasingly lucrative for them.

But insurers also aren’t happy with the status quo. They’ve lost billions of dollars on their Obamacare customers — $7.9 billion in 2015 alone, according to McKinsey — and some of the biggest plans have abandoned the marketplaces.

Despite widespread misgivings about the repeal effort, the industry has largely held its fire. House Republicans showed little interest in engaging with the health care industry as they pushed through their repeal bill, but the Senate may be more receptive. Last week, AHIP sent a detailed letter to Senate Finance Chairman Orrin Hatch (R-Utah) laying out its concerns with the House bill, which the Senate is expected to rewrite.

Some insurers have come out aggressively against key pieces of the House’s repeal plan in recent days. UnitedHealth wrote a letter to Hatch this week arguing that Obamacare’s Medicaid expansion should be preserved. And the CEO of Blue Cross Blue Shield of Massachusetts penned an op-ed warning against weakening protections for individuals with costly medical conditions.

But insurers have mostly focused on trying to get the Trump administration to continue a key Obamacare subsidy program that’s being challenged in court. President Donald Trump has repeatedly threatened to cut off that funding, which most insurance experts believe would trigger an implosion of the struggling Obamacare markets. The fate of the subsidies, worth about $7 billion per year, remains in limbo after the Trump administration recently asked a federal court for another 90 days to consider how to proceed.

Insurers are “caught in this debate right now,” said Chris Jennings, a veteran Democratic health policy expert. “They find themselves in a little bit of no-man’s land.”

The industry stood by Obamacare for years through court challenges and the rocky HealthCare.gov rollout. But the fragmented industry started to come apart two years ago, shortly after Ignagni left AHIP. Since then, two of the five largest national insurers — UnitedHealth Group and Aetna — left the group, as did WellCare, one of the country’s largest Medicaid plans.

Those defections were a blow to the association’s muscle. As other health care industries ramped up lobbying in the first quarter of this year, AHIP scaled back. The organization spent $1.7 million in the quarter, well behind the $2.2 million it spent the same time last year.

“I don’t know what these companies think they gain by going solo,” Epstein said. “The stakes are very high and the only way the industry can be effective is to speak with one voice.”

Departures within AHIP have also turned heads on Capitol Hill. Its former senior vice president for federal affairs, Jeremy Allen, a former GOP House staffer, left in March. Then another top federal affairs staffer, Courtney Lawrence, left to join HHS. In addition, four executive vice presidents and the group’s top attorney have left since Ignagni’s 2015 departure — perhaps not surprising given her long tenure.

“Virtually the entire team involved in advocacy has turned over,” said one industry source, speaking on condition of anonymity. “It’s hard to play a game at this level when the team is just getting to know each other.”

Tavenner, the AHIP CEO, faces a daunting task in placating the various interests within the organization, said Mario Molina, a former insurance CEO who’s been critical of the GOP’s repeal effort.

“She’s very, very knowledgeable. She knows what to say and what to do,” said Molina, who this month was fired from the insurance company he ran for over 20 years. “But she’s operating with one hand tied behind her back because she doesn’t have the full support of her board.”

AHIP has beefed up its Republican ties since the election. It hired David Merritt, who worked for former House Speaker Newt Gingrich, a Trump confidante; Adrienne Morrell, a former top lobbyist for Health Net; and Matt Eyles, who’s worked for health insurers and pharma. It also hired a public affairs shop, Firehouse Strategies, staffed by veterans of Sen. Marco Rubio’s 2016 presidential campaign.

But there’s still a perception on Capitol Hill that the lobbying powerhouse has lost some of its muscle at a crucial time for the health insurance industry.

“They’re afraid of alienating Republicans that they think control their fate over the next four years,” Epstein said.